The definition of the economic terms of a sale requires a prior examination of the transferor's tax position. The object of the transfer, the tax-recognised cost, the regime of the capital gain and the manner of payment of the price all contribute to determining the available net amount and the times of its availability. The analysis must also distinguish the company's assets from those of the shareholder: the consideration acquired by the former does not, of itself, constitute a personal availability of the latter.
An expression of interest may take different contents and forms and does not necessarily coincide with a letter of intent (Letter of Intent, LOI). A prior tax assessment makes it possible to examine the structures contemplated before the related economic terms are defined. The reference to the LOI concerns a stage of the negotiating process, not a term provided for by tax law. The content, the commitments assumed and the possibility of amending the preliminary documents require a separate legal assessment, without attributing uniform effects to them. The actual practicability of an alternative also depends on the timing of the transaction and on the purchaser's willingness to negotiate a different object.
Coordination with the checks on the company
The transferor's position is distinct from that of the company being sold. Vendor tax due diligence (see Vendor tax due diligence in an Italian share sale: scope, evidence and allocation of risk) ordinarily examines the latter's formalities and tax treatments; it does not attest the tax cost of the shareholding in the hands of the shareholder, nor the regime applicable to his or her capital gain. The two engagements require coordination of information, without overlapping their respective conclusions.
Transferor, object of the transfer and taxable base
Sale of the shareholdings by an individual
For an individual acting outside a business, capital gains on shareholdings fall within miscellaneous income of a financial nature under Article 67(1)(c) and (c-bis) TUIR. Article 68(6) TUIR determines their amount by comparing the consideration received and the cost or purchase value, with the inherent costs allowed and the exclusion of interest expense. Under the ordinary regime considered, the 26% substitute tax applies to the capital gain so determined, not to the gross price: the reference is Article 5 of Legislative Decree 461 of 21 November 1997, coordinated with Article 3 of Decree-Law 66 of 24 April 2014 and with Revenue Agency Resolution 74/E of 20 December 2021.
Reconstruction of the cost presupposes documentation of the acquisitions and of the subsequent history of the shareholding. Nominal value, the net equity of the company and the economic value attributed to the shares in the negotiation do not prove the cost recognised to the transferor. A comparison of offers founded on a cost not yet verified therefore remains conditional in nature: that limitation must appear from the simulation used in the negotiation.
Sale of the shareholdings by an IRES company
The corporate nature of the transferor requires a different characterisation of the income. Article 87 TUIR provides, where the conditions are met, for the exemption of 95% of the capital gain, known as participation exemption or PEX. The exemption does not concern the consideration and does not follow from the mere characterisation of the transferor as a holding company. Trading shareholdings are not automatically treated as equivalent to financial fixed assets.
The regime requires jointly uninterrupted holding, classification among financial fixed assets in the first financial statements closed during the holding period, residence or location of the participated company outside privileged regimes or satisfaction of the alternative conditions in letter (c), and the carrying on of a commercial business. The ordinary holding period runs from the first day of the twelfth month preceding the month of the sale, without prejudice to the special rules on contributions. What matters is the position of the specific shareholding in the hands of the transferor, not the date of formation of the latter.
The commercial character must exist uninterruptedly, at the time of realisation, at least from the beginning of the third tax period preceding it; for residence or location the durations in Article 87(2) TUIR apply. Letter (d) of paragraph 1 presumes, without the possibility of proof to the contrary, that the commercial-character requirement is not met for shareholdings in companies whose asset value consists predominantly of real property other than property to the production or exchange of which the activity is actually directed, and other than plant and buildings used directly in the carrying on of the business, with the clarifications in the provision. When a holding company is sold, the objective requirements are verified on the participated companies representing the greater part of the value of its assets under paragraph 5 of the same article. The activity declared by the parent company therefore does not exhaust the check.
The ordinary IRES rate of 24% is referred to total net income (Article 77 TUIR). Its application to the model of the sale presupposes the characterisation of the component, the check of PEX where relevant and the reconstruction of the tax cost. From those data alone a uniform effective burden cannot be inferred. The proceeds, net of the relevant tax, nevertheless remain in the availability of the transferring company.
Sale of the business and subsequent attribution to the shareholder
In a sale of the business the consideration is acquired by the company that owns the business as a going concern. Article 86(1) and (2) TUIR governs the capital gain realised as a whole, including goodwill: the relevant cost is the tax-recognised cost of the business, not that of the shareholder's shareholding. PEX is not capable of being extended by analogy to that capital gain.
Any attribution to the shareholder is a fact distinct from the sale. For profits paid to a resident individual outside a business the 26% withholding under Article 27(1) of Presidential Decree 600 of 29 September 1973 ordinarily applies. A distribution of profits, a repayment of capital and a liquidation require separate characterisations and cannot be treated as equivalent without an examination of the items concerned.
A comparison between a sale of the shares and a sale of the business must therefore identify separately the company's taxable income, the liquidity remaining in its assets and the amount possibly attributable to the shareholder. The arithmetic sum of rates applied to different bases does not represent the overall charge. A sale of shareholdings effected by a holding company also requires this distinction, if the result to be measured is the shareholder's personal availability rather than that of the company.
Timing of the consideration and the cash requirement
An assessment of the net amount cannot disregard the period in which the income becomes relevant for tax purposes. A distinction must be drawn between completion of the sale, receipt of the consideration, attribution of the income and the due dates for payment. A deferral of the price governs a contractual relationship; it does not determine an instalment arrangement for tax payments.
Determined consideration with deferred payment
For an individual outside a business, taxation follows the cash basis. Where there is a certain deferred price, Article 68(7)(f) TUIR requires the cost to be attributed in proportion to the sums received in the period: it is not permitted to attribute the entire cost discretionarily to the first receipt. Revenue Agency Resolution 74/E of 20 December 2021 also distinguishes realisation, relevant to identification of the applicable regime, from receipt, relevant to the period of taxation.
For the company, attribution is instead, as a rule, on an accrual basis. The deferred due date of a certain and determined receivable does not, of itself, postpone the related income component. An assessment of the payment terms must therefore represent any mismatch between taxation and collection, and the resulting cash requirement for the payments. The analysis of Article 109(1) and (2) and Article 83 TUIR must be coordinated with the accounting regime that is relevant for tax purposes; an accounting regime indiscriminately applicable to all IRES persons is not formulated here.
Contingent consideration and price adjustments
A component that is subject to the occurrence of contractual conditions, commonly referred to as an earn-out, differs from the deferred payment of a sum already determined. For the individual, Resolution 74/E/2021 treats that component as part of the sale price and of the same income nature, with taxation on a cash basis. The treatment of the cost must however be assessed in the particular structure: the solution relating to the redetermined cost examined in the document does not express a general rule of priority recovery of any historical cost.
For the company, Article 109(1) TUIR requires certainty of existence and objective determinability of the amount, in coordination with the applicable accounting regime. A contingent component may enter income in a later period, when those conditions are met, without necessarily coinciding with the period of payment. Neither attribution in full to the sale nor postponement until receipt therefore constitutes a solution that can be generalised to every variable corporate component.
Revenue Agency Resolution 184/E of 13 July 2009 treats a genuine adjustment of the corporate price as subject to the rules of the original component. Subsequent receipt does not complete a PEX requirement that was missing at the time of the sale, with which holding in the hands of the transferor ceased. The characterisation must also distinguish adjustments or additions to the consideration from warranty and indemnity obligations, without inferring the treatment from the mere identity of the parties to the payment.
Tax spreading of the capital gain on a business
The faculty to spread the capital gain must be examined separately from the contractual deferral. Article 86(4) TUIR, applicable to capital gains realised from the period following that current on 31 December 2025, does not retain a generalised faculty for non-PEX capital gains on assets and shareholdings held for at least three years.
The option concerns businesses or branches held for at least three years. The capital gain may enter income in equal instalments in the period of realisation and in subsequent periods, not later than the fourth following period: five periods in all at most. The choice must appear from the income tax return; for non-calendar periods the specific starting date must be checked. The duration of the tax spreading is independent of the number of instalments of the price, both when the consideration is collected immediately and when it is deferred.
Contributions preceding the sale and the requirements of the transferee company
The introduction of a holding company into the shareholding structure requires a separate check of the contribution and of the subsequent sale. An already existing company that receives the shareholdings close to the sale does not, by that fact alone, have the holding period attributable to the contributor. The reconstruction must concern the specific shareholding and the regime through which it was acquired.
Contribution or hive-down of the business or of a branch
When the transferring company carries on a business, or a branch with organisational autonomy, the transfer to the purchaser may also be effected by contributing the going concern to another company and subsequently selling the shareholdings received. A contribution between residents in the carrying on of commercial businesses does not constitute a realisation; the contributor takes as the value of the shareholdings the last tax-recognised value of the business (Article 176(1) TUIR). Paragraph 3 of the same article provides that the contribution of the business under the regimes there provided for, and the subsequent sale of the shareholding received in order to benefit from the exemption, are not relevant for the purposes of Article 10-bis of Law 212/2000. A similar provision concerns a demerger having a business as its object and the subsequent sale of the shareholding received (Article 173(15-quater) TUIR), also applying to a demerger by hive-down under Article 2506.1 of the Civil Code, which is governed for tax purposes by paragraphs 15-ter and 15-ter.1 of the same article.
Those provisions exclude the abusive relevance of the sequence as such; they do not establish the existence of the business, the values taken or the requirements of the exemption. Revenue Agency ruling no. 195 of 9 October 2024 treated a contribution of a branch followed by the sale of the entire shareholding as falling within paragraph 3, making clear that further connected acts may render the entire transaction subject to assessment under Article 10-bis; in the case examined the withdrawal of the shareholders financed with the consideration was treated as abusive. The capital gain on the sale of the shareholdings benefits from the exemption only if the requirements of Article 87 TUIR are met. The shareholdings received are treated as classified among financial fixed assets in the financial statements in which the assets of the business appeared (Article 176(4) TUIR). For the holding period, the practice referred to by the same ruling attributes to the shareholdings the seniority of the business contributed; for a hive-down, letter (c) of Article 173(15-ter) expressly counts the holding period of the business. The commercial character of the transferee or beneficiary company, including the real-estate presumption, and residence nevertheless require a separate check.
Software applications, real property and individual assets
The characterisation of what is transferred precedes the choice of regime. For income-tax purposes the notion of a business derives from Article 2555 of the Civil Code: what is required is a complex of assets organised for the carrying on of a business, capable of allowing the activity to be started or continued, including with subsequent additions by the purchaser. Practice gives weight to organisation, the functional links between the elements and their destination to the business, without a predetermined list of assets (Revenue Agency ruling no. 195/2024). A software application transferred together with the staff engaged in development and management, the technological infrastructure, the contracts with customers and suppliers and the other necessary relationships may amount to a business branch, if the whole already had functional autonomy in the hands of the transferor; in that case the provisions referred to in the preceding paragraph apply. It is not sufficient to assemble, close to the transaction, assets lacking a pre-existing organisational connection, nor to transfer intangible rights accompanied only by the accessory rights to their exploitation, as was held in relation to a trade mark by Revenue Agency ruling no. 210 of 19 August 2025.
The transfer of the application alone, as an isolated intangible asset, of a property or of other individual assets remains outside the provisions of Article 176(3) and Article 173(15-quater). A contribution of such assets is a realisation at normal value (Article 9(2) and (5) TUIR). A demerger by hive-down may instead take place in continuity of values also for assets and liabilities that do not constitute a business; the shareholdings received are admitted to the exemption only if and when its requirements are satisfied and, if the beneficiary company already exists, with a holding at least from the beginning of the third tax period preceding realisation (Article 173(15-ter) and (15-ter.1) TUIR). For companies whose assets consist predominantly of real property other than instrumental or trading property, the presumption in letter (d) of Article 87(1) also applies. In these cases the subsequent sale of the shareholdings must be assessed in the particular case under Article 10-bis, having regard to the tax advantage, the economic substance of the transactions and the extra-fiscal reasons. Indirect taxes and a contribution of shareholdings require separate checks.
Contribution of shareholdings
Article 177(2) TUIR governs certain contributions with the acquisition or increase of legal control. The realisation value is linked to the equity items formed by the transferee company as a result of the transaction. This is a controlled realisation, not automatic neutrality: any absence of a capital gain depends on the applicable requirements and on the values actually taken.
In the absence of the acquisition or increase of control, paragraph 2-bis requires further conditions. For unlisted shareholdings, the thresholds must exceed 20% of the votes or 25% of the capital or equity; the transferee company must be held solely by the contributor or, if an individual, by the contributor and the permitted family members. If a holding company is contributed, the check of the shareholding chain follows paragraph 2-ter and the related rules: the percentage in the parent company alone is not conclusive. These conditions concern the contribution and do not constitute general thresholds for access to PEX.
For contributions under paragraph 2-bis, Article 177(2-quater) TUIR extends, in the hands of the transferee company, the PEX holding period to the sixtieth month preceding that of the sale. That provision lays down a tax condition of the exemption, not a civil-law bar to the sale. It does not extend indiscriminately to contributions under paragraph 2, for which the ordinary requirements remain to be checked.
Revenue Agency ruling no. 216 of 5 November 2024 recalls that the holding period runs from the contribution, without automatically counting the contributor's earlier holding, even if no capital gains arise. The document uses the numbering preceding the reform of late 2024 and must be coordinated with the current paragraph 2-quater. The assumed sale date in the simulation must therefore be compatible with the regime actually applicable to the shareholdings contributed.
Assessment of the sequence and limits of the prior analysis
The check of the requirements of the individual regime remains distinct from the examination of the sequence for the purposes of abuse of law. Article 10-bis of Law 212 of 27 July 2000 considers an undue advantage, the absence of economic substance and the essential nature of the tax advantage, without prejudice to the relevance of non-marginal extra-fiscal reasons and to the freedom of choice among transactions with a different burden. The saving does not, by itself, amount to abuse; the mere statement of organisational purposes does not replace a check of the economic function of the acts.
The contribution, the sale and the subsequent uses of the cash must be assessed as a whole. The functions of the holding company, the decision-making structure and the actual destination of the resources must be consistent with the reasons represented. The elapse of the holding period, though necessary when required, does not exhaust that assessment.
A transfer of the transferor's residence requires a separate examination. The substantive and temporal conditions of Article 2 TUIR and the Italian-source rules of Article 23 TUIR, in addition to any treaty rules, do not allow the treatment of the capital gain to be inferred from a mere change of address or from the chronological sequence between the transfer and the signing of the LOI. No cross-border solution is proposed here.
Content of the assessment in support of the negotiation
The outcome of the analysis must consist in a written comparison of alternatives that are legally and economically practicable. For each structure, the reconstruction identifies the transferor, the object, the documented cost, the applicable regime and the assets in which the proceeds are located. Unverified conditions and documentary limitations must remain explicit, so that a conditional simulation is not taken as a conclusive determination of the net amount.
The comparison represents separately certain and contingent components of the price, periods of taxability, dates of receipt and the cash requirement for the payments. A contingent component cannot be taken as available funds for a certain obligation. If the structure contemplates a contribution, the requirements and time limits of the subsequent sale must be checked before its result is taken into the assessment of the offers.
Coordination among tax, financial and legal advisers concerns these conditions, not only the numerical result of the simulation. The prior analysis does not guarantee a higher consideration, acceptance of the structure by the purchaser or a predetermined saving; it delimits the conditions on which the tax assessment may be used in the negotiation.
References from 2027 and separation from the current framework
Legislative Decree 117 of 19 June 2026 provides for the application of the new consolidated income tax law from 1 January 2027 (Article 377). The correspondences identified for the scope dealt with are set out separately:
The ordinary 26% substitute tax on shareholdings within the scope is provided for by Article 304(1) of the new consolidated law. These correspondences do not anticipate the application of the new articles to 2026 and do not imply that all paragraphs or letters retain their numbering and wording. The applicable text is to be checked by reference to the transaction and to its dates.
Legal sources and administrative practice
- Presidential Decree 917 of 22 December 1986, TUIR (in force 7 November 2026): Article 2, Article 23, Article 67, Article 68, Article 77, Article 83, Article 86, Article 87, Article 109, Article 177.
- Article 5 of Legislative Decree 461 of 21 November 1997, to be coordinated with Article 3 of Decree-Law 66 of 24 April 2014.
- Article 27(1) of Presidential Decree 600 of 29 September 1973.
- Revenue Agency Resolution 74/E of 20 December 2021.
- Revenue Agency Resolution 184/E of 13 July 2009.
- Revenue Agency ruling no. 216 of 5 November 2024.
- Article 10-bis of Law 212 of 27 July 2000.
- Legislative Decree 117 of 19 June 2026, consolidated income tax law, applicable from 1 January 2027: Article 76, Article 77, Article 95, Article 96, Article 118, Article 177, Article 304, Article 377.
- TUIR: Article 9, Article 173 and Article 176;
- Civil Code: Article 2506.1, inserted by Article 51 of Legislative Decree 19 of 2 March 2023, and Article 2555;
- Administrative practice: Revenue Agency ruling no. 195 of 9 October 2024 and Revenue Agency ruling no. 210 of 19 August 2025;
- New consolidated law 2027: Article 173 and Article 176.
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